Terra Firma props up Wyevale Garden Centres 

Terra Firma's Guy Hands
Terra Firma's Guy Hands

Guy Hands has suffered fresh embarrassment after his private equity firm Terra Firma was forced to prop up Wyevale Garden Centres.

The Sunday Telegraph can reveal that Wyevale, which Terra Firma bought for £276m in 2012, came within a whisker of breaching its banking covenants at the start of the year after a slump in earnings.

Despite the private equity firm’s attempts to renegotiate with its banks, one of the lenders refused to waive its terms. In order to avoid a breach, Terra Firma was left with no choice but to spend around £25m buying out the bank’s debt.

Terra Firma, which also owns care homes provider Four Seasons, has a €1bn (£859m) warchest to pump into deals.

Wyevale Garden Centres attempted to buy rival Dobbies from Tesco last year in a move that would have made it six times the size of its nearest competitor, but lost out in a bidding war to Midlothian Capital Partners and Hattington Capital.

Former Sainsbury’s boss Justin King and Terra Firma vice-president was made chairman of Wyevale last August to help lead a turnaround. Mr King recruited Roger Mclaughlan from Toys’R’Us last year to help spearhead a shake-up.

Terra Firma's Wyevale Garden Centres
Terra Firma's Wyevale Garden Centres

Wyevale Garden Centres, which has 140 sites, attempted to buy rival Dobbies from Tesco last year in a move that would have made it six times the size of its nearest competitor. However, it lost out in a £217m bidding war to Midlothian Capital Partners and Hattington Capital.

Earlier this month, Mr Hands invested €40m in an artificial turf business.

Terra Firma restarted paying dividends in January this year, despite revenues falling to their lowest level in more than a decade. Staff and directors took a pay cut after the firm reported a 13pc decline in turnover in the year to March 2016, its lowest result since 2004. Mr Hands has said that he will halve starting salaries to £35,000 but offer instead to pay for a deposit on a house in London.

Terra Firma and Wyevale Garden Centres declined to comment.

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